Robert Hedlund: Greed not only the only flaw in Chapter 40B

Friday

Chapter 40B is now about maximizing developer profits, not creating affordable housing. The fraud is real. Excessive developer profits are real. The failure of 40B is real.

I have listened to a lot of revealing testimony over the years as state senator, but without question the recent testimony of our state’s Inspector General regarding his findings of fraud and abuse by developers utilizing the state’s 40B law was some of the most shocking information presented on Beacon Hill.

At a hearing I requested as the ranking member of the Senate Committee on Post Audit & Oversight, Inspector General Gregory Sullivan testified that 40B developers likely owe cities and towns as much as $100 million as a result of fraudulent behavior and a broken state oversight process.

And in addition to restating his opinion that 40B is one of the biggest scandals perpetrated upon Bay State taxpayers, the Inspector General also testified to the historic and ongoing reluctance by state housing officials to monitor the program or adopt any sort of meaningful reforms.

For example, the state has only reviewed 53 of the 220 40B projects completed since 1998 for excess profits and has no formal plans to audit the remaining 167.

Sullivan also drew attention to the state Department of Housing and Community Development’s disturbing and frustrating habit of enacting significant policy changes through internal regulations and guidelines, often without public hearings.

These changes in policy are often completely dismissive, and sometimes counterproductive, to legitimate concerns being raised by communities, lawmakers and, in some cases, the courts.

It was telling that Housing Secretary Daniel O’Connell and Undersecretary Tina Brooks chose to spend most of their time defending the merits of 40B, rather than directly refuting the Inspector General’s testimony.

The Patriot Ledger was correct in saying that developer greed alone isn’t sufficient reason for lawmakers to pull the plug on Chapter 40B. But this is not simply about greed; this is also about the gross failure of 40B to create sufficient affordable housing in Massachusetts.

After 40 years with 40B, Massachusetts still ranks near the bottom in the country with regard to housing affordability. The number of communities considered affordable to first-time home buyers has plummeted since 1998.

And statistics show that more affordable housing has been created in Massachusetts over the past decade using alternative affordable housing plans than 40B.

In addition, the average percentage of affordable units in 40B projects has plummeted from 73.4 percent over the first 30 years of the law, to 29.7 percent between 2000 and 2006.

This is the biggest sign that 40B is now about maximizing developer profits, not creating affordable housing. The fraud is real. Excessive developer profits are real. The failure of 40B is real.

I am hopeful that this hearing will result in a legislative reform package that at the very least addresses the cost certification failures and roots out the fraud and abuse the Inspector General has documented. Otherwise, voters may take it upon themselves to repeal the law come 2010.

Sen. Robert Hedlund, who represents the Plymouth and Norfolk district, is a Republican member of the Senate Post Audit Committee. He lives in Weymouth.

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